What the €480 Million Increase Means for Providers
There is a phrase that gets used a lot in Irish childcare circles: “the sector is under pressure.” It is one of those things that everyone says, but nobody explains. So let us explain it with a number instead.
That number is €480 million. It is the amount of money the government is putting into Core Funding for the programme year that starts in September 2026 . It is the biggest single investment in the scheme since it was created in 2022. And it will affect every single service that signs up for it – which, at last count, is more than 90 percent of all eligible providers in the country .
But what does that money actually do? Where does it go? And why should a parent, or a provider, or an educator, care about the difference between €390 million and €480 million?
Here is the simple version.
What Is Core Funding, Again?
Before we get into the numbers, it helps to remember what Core Funding is for.
Core Funding is a grant the government pays directly to childcare services. It is not a voucher for parents. It is not a subsidy for individual children. It is money that goes straight to the provider, to help cover the basic costs of running a service: wages, rent, insurance, heat, light, and all the rest .
In return for taking this money, providers have to follow certain rules. The main one is a fee freeze. If you were charging €250 a week in September 2021, you cannot charge more than that now. Some services also have to follow maximum fee caps, which set a legal ceiling on what they can charge for different types of care .
The idea is simple: the government gives providers money so they do not have to get it all from parents. That is how affordability and sustainability are supposed to work together.
The Numbers: How We Got to €480 Million
Core Funding has grown fast. In its first year, 2022, the allocation was €259 million. By the fourth year, the current one, it was over €390 million. That is already an increase of more than 50 percent in three years .
Budget 2026 added another €87.6 million on top of that. That brings the allocation for the new programme year, which runs from September 2026 to August 2027, to over €480 million .
To put it in perspective: the government is spending almost double on Core Funding in 2026/27 compared to what it spent in 2022/23. That is a big shift.
Minister Norma Foley said the increase is meant to support three things: more places, better pay, and keeping fees down for parents .
Where Does the Money Actually Go?
The €480 million is not just a lump sum that gets divided up equally. It is allocated for specific purposes. Here is where it goes.
Natural capacity growth.
The government expects the sector to grow by about 4.2 percent in the coming year . That means more places, more children, and more staff hours. Core Funding helps pay for that growth. It is not just about keeping the lights on. It is about making room for more families.
Support for the new pay rates.
This is the big one. In October 2025, new Employment Regulation Orders came into force, setting minimum pay rates for early years educators and managers. An Early Years Educator must now earn at least €15.00 per hour. A Centre Manager must earn at least €19.00 per hour .
Those rates cost money. So the government has set aside up to €45 million in ring-fenced funding to help services cover the cost. Ring-fenced means the money is specifically for this purpose. It cannot be used for anything else .
But here is the important detail. That €45 million is contingent on new EROs being established. In September 2026, the Joint Labour Committee put forward proposals for a further 6 percent increase in minimum rates. If those proposals become law, the €45 million is there to help pay for them .
Support for the fee freeze and fee caps.
From September 2026, the maximum fee caps for Core Funding services have been lowered again. A full-day place of 45 hours per week now has a maximum fee of €280, down from €295 last year .
That means some services will have to reduce their fees. The government has set aside €21.4 million in full-year funding to help offset that loss of income. This money is distributed through an enhanced Base Rate, so it reaches all Partner Services, not just the ones affected by the caps .
Additional capacity through Building Blocks.
Not all the capacity growth comes from the existing Core Funding money. The Building Blocks Extension Scheme is a separate capital fund that helps services expand their buildings. Phase 2 of the scheme, announced in April 2026, offers grants of between €50,000 and €265,000 for private providers, and between €100,000 and €530,000 for community providers, to build extensions .
The goal is to create more full-day places for children aged one to three. That is the age group with the worst waiting lists. The scheme will deliver up to 1,500 new full-day places starting in 2026 .
What This Means for Providers
If you run a childcare service, the increase in Core Funding is good news, but it comes with strings.
The first string is the fee freeze. You cannot increase your fees above what you charged in September 2021. That has not changed .
The second string is the new fee caps. If you were charging above the new maximums, you have to reduce your fees. The government estimates that about 12 percent of services will have to reduce at least one fee . The rest – the vast majority – are already charging below the caps and are not affected.
The third string is the pay rates. If the new EROs come into force, you have to pay your staff the new minimum rates. The €45 million in ring-fenced funding is there to help, but it may not cover the full cost for every service.
For services that are struggling, there is a Sustainability Review process. If your fees are very low – below the regional median – you can apply for permission to increase them slightly. The increases are small, between €3 and €18 per week, and they cannot push your fees above the median for your area .
What This Means for Parents
If you are a parent, the Core Funding increase affects you in two ways.
First, the fee caps have come down. If your service was charging the maximum, your bill should drop. A full-day place that cost €295 a week before subsidies now costs €280. With the universal NCS subsidy, your out-of-pocket cost drops from around €198.70 to €183.70 per week .
Second, the pay increases for staff should help with quality and stability. When educators are paid better, they are more likely to stay in the job. That means less turnover, more experienced staff, and better care for your child. The government is putting money into the system specifically to make that happen.
What About the Future?
The €480 million is for one programme year. But the government has bigger plans.
The “Shaping the Future” Early Years Action Plan, published in December 2025, sets out a phased approach. Phase 1, in 2026, focuses on the changes we have just described. Phase 2, from 2027 to 2029, will involve a public consultation and more long-term changes .
The Programme for Government has committed to reducing childcare costs to €200 per month per child. That is not €200 per week. That is €200 per month. The current fee caps are a step toward that goal, but they are not the final destination .
There is also a new focus on State-led childcare. The government is putting €36 million in capital funding into 2026 to acquire and fit out State-owned services. Up to eight new services will be acquired over the course of the year, with the focus on areas where there is unmet demand .
That is a significant shift. Until now, almost all childcare in Ireland has been provided by private or community organisations. State-led services would be a new model. It is too early to say how big it will become, but the direction of travel is clear.
The main point
The €480 million in Core Funding for 2026/27 is a record investment. It is more than double what the scheme started with. It is designed to do three things: keep fees down for parents, pay staff better, and create more places for children.
For providers, it means more money but also more rules. The fee freeze continues. The fee caps are lower. The pay rates are higher. The funding is there to help, but managing the changes will take work.
For parents, it means lower fees at the top end and a more stable workforce. It does not mean childcare is free. It does not mean every child will get a place. But it is a step in the right direction.
The government has committed to spending over €1.7 billion on Core Funding since 2022 . That is a lot of money. Whether it fixes the system is still an open question. But for the coming year, it is the biggest thing happening in the sector.
Early Years Ireland is an independent digital publication. We are not affiliated with any representative body or trade union. This article is for information only and does not constitute financial or legal advice. For personalised advice on Core Funding, contact your local City or County Childcare Committee.
